Deming & Benchmarking

Benchmarking is not a word specifically used Dr. Deming's material. That said, he did talk about the subject using other terms. 

Believe it or not, I found this reference in the 'Study Guide' that accompanies The W. Edwards Deming Institute's 4-Day Seminar DVDs.

(page 51)
Notes on Some Common Misunderstandings of Dr. Deming's Philosophy (20)

Some interpretations of Dr. Deming's theory can be viewed as misunderstandings of the lessons Dr. Deming taught. Some of these misunderstandings, expressed as statements or questions, will be considered in the following.

(pages 53-54)
4. Isn't Dr. Deming against "Benchmarking?" Are we supposed to ignore what our competitors are doing?

Dr. Deming advocated scanning the environment to learn about innovations in technology, practices, and products, and to identify unmet needs and new market opportunities. He advocated learning by use of theory, and he cautioned us about copying.

Dr. Deming's view is clarified by the following quotes:

"True: anyone could make a list of companies that are doing well, even though their management follows one or all of the above bad practices. These companies are saved by good luck, coincidence, having a product or service that commands good market. Any of these companies might do much better were the management to learn some theory of management. If anyone were to study without theory such a company, i.e., without knowing what questions to ask, he would be tempted to copy the company, on the pretext that 'they must be doing some things right.' To copy is to invite disaster." (29)

"Too often this is the story. The management of a company,...knowing not how to go about it, having not guidance from principles, seeking enlightenment, embark on excursions to other companies that are ostensibly doing well. They are received with open arms, and the exchange of ideas commences. They (visitors) learn what the host is doing...Devoid of guiding principles, they are both adrift. Neither  company knows whether or why any procedure is right, nor whether or why another is wrong. The question is not whether a business is successful, but why? and why was it not more successful? One can only hope that the visitors enjoy the ride. They are more to be pitied than censured." (30)

Dr. Deming's comments do not imply that one should not study competitors and their actions, but to do so fruitfully requires a theory by which to interpret their actions. 

Benchmarking requires a decision about which companies to study. The basis for the decision is not as simple as "those that are doing well now." The dynamic nature of "success" by any measure and delays between causes and effects call into question a judgment that current "success" is the result of current practice or is indicative of good management. "Success" is multi-dimensional. "Success" on one measure at one period of time may not be the same as creating an organization that can survive and prosper over the long term. Attempting to achieve success by copying means that an organization will be a follower in the marketplace, rather than a leader by innovation and market creation.

(20) These notes were prepared by facilitators of the General Motors seminar, "The Leadership Philosophy of W. Edwards Deming," for use during discussions with the audience
(29) Deming, W. Edwards, The New Economics, Second Edition, M.I.T. Center for Advanced Engineering Study, 1994, p. 36.
(30) Deming, W. Edwards, Out of the Crisis, M.I.T. Center for Advanced Engineering Study, 1986, pp. 128-129.

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